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Artificial intelligence (AI) has been pegged by some as fourth industrial revolution with many industries and many countries investing heavily in it.
According to research reports including the one from Statista show that there will be massive growth in revenues from AI by 2025. Statista predicts that revenues from AI would touch US$59.74 billion in 2025 up from US$1.37 billion in 2016.
Meanwhile, a report from McKinsey Global Institute predicts that the potential value of AI could be in the range of US$3.5 trillion to US$5.8 trillion in value annually across nine business functions in 19 industries. The industries include retail, banking, healthcare systems and services and more. However, it was said that the figures are not forecasts for a particular period in time but they are indicative of considerable potential for the global economy that advanced analytics represents.
With that in mind, here the Investing News Network provides a comprehensive look at AI with an overview of how investors can step into this ever-growing sector to help better answer the question to, “what is artificial intelligence investing?”
What is artificial intelligence?
NVIDIA in its report said AI is transforming the world and that much of its origins stretch back to the post World War II era. The company credits the development of open source frameworks for creating a revolution which was backed by development of Graphics Processing Units with faster and powerful chips to support workloads of machine learning and deep learning.
While ‘Narrow AI’ is currently in play, the natural progression is towards ‘General AI,’ which in concept is the machine that has all the human senses and does things just like humans.
Often AI and machine learning get intertwined. Eric Schmidt, chairman, Alphabet (NASDAQ:GOOG) explained the difference between them, which are two of the popular terms that are pegged by certain organizations as the fourth industrial revolution.
Schmidt explained that machine learning is “how the system looks at the complex sets of data” and learns from the data, while AI is how the data is expressed.
Further, Schmidt said that the terms are used interchangeably and pointed to Google’s Google Photos and Google Translate products as examples for AI in play.
“We think of it as a human like experience and intelligence but what really happened is that machine has learned from patterns,” he said.
The evolution of artificial intelligence
The evolution of AI is progressing at rapid speed as demonstrated by NVIDIA who unveiled a new technique that let robots to work with humans. The technique was created using a deep learning based system which the company’s research team claimed it to be a first of its kind. The company in its release said that deep learning is a subset of machine learning and AI.
While machine learning was seen as an approach to achieve AI using large amounts of data and large amounts of coding to get the job done, deep learning went a step further. In this technique, multi-layered artificial neural networks are used to deliver state-of-the-art accuracy in tasks such as object detection, speech recognition, language translation and others.
Google themselves have been pushing for AI as seen from their I/O conference held in May where Google unveiled host of products that made use of AI. Of note from the conference was the new technology called Google Duplex which is an evolution of Google Assistant.
According to Schmidt, small startups are all working on AI with the biggest area for them being the medical area.
Schmidt said that a classic startups are those who use new techniques to cure or diagnose cancer and to find new techniques to discover drugs. In particular, Schmidt said that AI in the the global medical care industry will be “immense.”
Outlook for artificial intelligence
According to a Grandview Research report, the AI market is projected to reach US$35.87 billion from direct revenue sources by 2025 and growing at a CAGR of 57.7 percent between now and then.
The report states that North America will largely dominate the space due to high government funding, leading players and a strong technical base. Voice recognition is also behind the growth of AI.
In terms of the fastest growing market, the report states that the Asia Pacific region is at the top of the list thanks to improvements in information storage capacity, high computing power and parallel processing. The report indicates that those three areas have “contributed to the swift uptake” of AI in industries like automotive and healthcare.
Schmidt pointed out that China has made AI as its national priority and that they are changing their university models with the intention of catching up to the world by 2020 and dominate in every segment by 2030.
Other market projections include a Research and Markets report, which highlights that the AI market is expected to reach US$190.61 billion by 2025 from U $21.46 billion in 2018, and growing at a CAGR of 36.62 percent during the forecast period. Fuelling that growth will be AI’s use in various applications such as virtual assistants, marketing, search advertising, identity access management, intruder detection and cybersecurity.
Ways to invest in artificial intelligence
With such a huge potential and with many companies and countries pushing for AI, there are number of ways investors can step into the sector including:
For those who are new to investing and would rather invest in a market rather than a specific company, ETFs are a popular way to do so. Here’s brief overview of four AI ETFs for investor consideration:
- Sprott BUZZ Social Media Insights (NYSEAMERICAN:BUZ): The fund came into inception on April 18, 2016 and currently has 76 holdings with its top holdings being: Micron Technology (NASDAQ:MU), Netflix (NASDAQ:NFLX), Advanced Micro Devices (NASDAQ:AMD) and Twitter (NYSE:TWTR).
- Global X Robotics & Artificial Intelligence Thematic (NASDAQ:BOTZ): The fund came into inception on September 12, 2016 and has 29 holdings with the top holdings being NVIDIA, Intuitive Surgical (NASDAQ:ISRG), Keytence (TSE:6861) and Yaskawa Electric (TSE:6506).
- ARK Industrial Innovation ETF (NYSEAMERICAN:ARKQ): The fund came into inception on September 30, 2014 and has 39 holdings with itstop holdings being Tesla (NASDAQ:TSLA), Stratasys (NASDAQ:SSYS) and Baidu (NASDAQ:BIDU).
- Robo Global Robotics and Automation Index (NASDAQ:ROBO): Lastly is the Robo Global Robotics and Automation Index, which came into inception on October 22, 2013 and has 88 holdings. Its top holdings include: Keyence (TSE:6861), Oceaneering International (NASDAQ:OII) and Zebra Technologies (NASDAQ:ZBRA).
For investors looking to put money into a company, there are a number of options including the following:
- Diagnos (TSXV:ADK): A publicly traded Canadian corporation with the mission of early detection of critical health issues through the use of AI. The company operates in 16 countries with 131 screening sites.
- NexJ Systems (TSX:NXJ): The company is a provider of customer management products for the financial services industry with the company using AI to improve customer service and increase advisor and banker productivity. The company has clients throughout North America, Asia Pacific and Europe.
- ProntoForms (TSXV:PFM): ProntoForms is one of the leading providers of smart mobile forms for enterprise with the company’s solution is used to collect and analyse field data with smartphones and tablets. The company claims to have 100,000+ subscribers that harness the intuitive.
- Venzee Technologies (TSXV:VENZ): Venzee is a SaaS (software as a service) company that was launched in 2014 to help e-commerce vendors and retailers to transform and deliver data for the digital supply chain. The company claims to have clients in 100 countries.
- VIQ Solutions (TSXV:VQS): The company is a leading technology and service platform provider for digital evidence capture and content management. The company’s solution are used in over 20 countries with tens of thousands of users.
In sum, with so much growth gong into the AI sector over the coming years, now may be the time more than ever to jump into this space.